I recently wrote about hedge manager Philip Falcone's biggest bet of his career; well apparently, it has proven too big for Goldman Sachs (NYSE: GS) and The Blackstone Group (NYSE: BX). The financial companies, both large investors in Falcone's Harbinger Capital fund, have both sent withdrawal notices to the fund.

Falcone has been extremely successful throughout his career finding value in distressed companies, while also making money on the short side, betting against financial stocks, but his most recent bet is unlike any of his others.

The bet
Falcone has allocated 90% of his hedge fund's $3.4 billion in assets to wireless telecommunications, as he attempts to create his own wireless 4G network to compete with the likes of AT&T (NYSE: T) and Verizon (NYSE: VZ). The fund has raised about $3 billion to take over SkyTerra Communications, and he has spun out a new company called LightSquared to run the operation. SkyTerra has the right to lease spectrum from the FCC, which is extremely limited and necessary to build a wireless network.

Falcone is already facing an uphill battle as Sprint (NYSE: S) has already begun to roll out its 4G network, while Verizon expects to be in 38 cities by the end of the year. The best case scenario has his network starting build out by 2012 with nationwide completion in 2015. He'll also have to convince consumers to switch from established telecom brands with strong networks to his start-up.

Troubles for Falcone
It is not known if Goldman Sachs or Blackstone soured on Falcone's business idea. However, according to Bloomberg, it is believed that Goldman Sachs is unhappy with Harbinger's poor performance year to date, as well as a disclosure by Harbinger that Falcone borrowed $113 million from a smaller fund in which withdrawals were suspended due to assets being tied up as a result of the Lehman Brothers bankruptcy. He used the funds to pay personal taxes.

If Falcone's Harbinger fund is faced with a flood of redemption requests as a result of this news, it may be forced to sell assets. Many believe that Harbinger does not have the funding to match established telecom leaders. It took Clearwire (Nasdaq: CLWR) more than $11 billion to build its 4G network, and Falcone has not come close to that level of funding.

Perhaps of greater concern to smaller individual investors is if Harbinger needs to unwind some of its equity positions. Falcone is known for making large concentrated bets in his portfolio, and currently some of his largest positions are in some very illiquid stocks. This means it will be more difficult for investors to unload shares if necessary.

For example, Harbinger's largest U.S. equity holding is in Spectrum Brands (NYSE: SPB). The fund owns more than 34 million shares, which represent more than 60% of Spectrum's shares outstanding. The average number of shares traded daily in the stock is only about 54,000. A forced liquidation could cause a rush to the exit in such a stock, with really nowhere to go.

What's next?
Harbinger requires 90 days' notice to begin redemptions once a withdrawal request is received, and it will only return 25% of a client's assets each quarter. Goldman Sachs has $120 million invested with Harbinger, so the maximum withdrawal of its $30 million a quarter is manageable. Falcone told MarketWatch that his fund will able to meet redemptions without liquidating any of his LightSquared assets or spectrum. However, the big question is whether other large investors follow suit. If this happens, Harbinger becomes vulnerable.

It is still unknown if Goldman and Blackstone will follow through with the redemption requests and if this will cause others to make similar requests, but any more large withdrawals could put a serious wrench in Falcone's grand plans. With Clearwire struggling and Falcone's plans continuing to look dicey, the incumbent giants of wireless continue sleep a little easier at night.

Andrew Bond owns no shares in the companies listed. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Fool has a disclosure policy.